Whether you are looking for financial freedom, a passive income or a plan to protect your wealth from inflation, investment property is still a very attractive method for wealth creation. Property has a dual benefit of providing a level of income together with capital appreciation over a longer period.
What’s the right property strategy for you?
To be able to identify the right property strategy for you, firstly you need to identify whether you are time rich or time poor.
Time rich strategies
By this I mean will you have plenty of time on your hands, perhaps you wish for Property to be your career?
If so the following strategies below might be suitable;
Refurbishing / Flipping
Buying a run down house, refurbing and selling on is classed as a trade when this is done frequently. The principal private residence relief will not apply and tax advice should be sought on this strategy.
Rent to rent
Negotiating a deal with an existing landlord to sublet a property to tenants avoids the initial outlay of acquisition cost and can be lucrative without the requirement and restraints of a mortgage.
House of multiple occupancy might be of interest if you have time on your hands. The benefits of this are yield and return on investment. Whilst your tenants might pay a premium for a room they will typically be transient and you’ll be hands on dealing with tenants issues. This is particularly relevant for student lets.
Furnished holiday lettings
Another high yielding method of property letting. With the increase of staycations, air B&B offers an easy to use platform to let your property. Whilst regulation may increase within this area in terms of safety and licencing, this could be a lucrative return on investment.
Time poor strategies
Many investors find themselves time poor with their focus on their career. Strategies that involve minimal interaction are therefore more desirable.
Residential Buy to let
Most common is a residential buy to let property. Typically let to a professional couple or family, this strategy is simple and an effective strategy with minimal hassle.
Off plan investments
Buying new build residential properties is attractive due to the building guarantees in place together with being confident you’ll meet the EPC rating criteria rules to commence in 2025.
Off plan simple involves placing a deposit on a new build project which will be completed at future date. By making an initial deposit and agreement to buy now you should benefit from any future capital appreciation from the build. Risk here is the possibility of the builder going bust so therefore ensuring the deposit is securely protected is a must.
Commercial property investment
Whilst this may seam more complex, often yields are more attractive for commercial rents. Void periods may be a concern.
You might be interested to find a “time rich” partner where you can explore property investment opportunities and work together to achieve a desired outcome
Very hands off, simply allowing a local housing association to manage the property for a contracted period of time guarantees no under occupancy, ensure you’ll have no headaches for maintenance or repairs but the quid pro quo is the lower rental income.
This article should not be considered as investment advice.
About the author
Pete Edwards is a director of Warr & Co Chartered Accountants. As an avid property investor he has over twenty years of experience in all aspects of property taxation and owning and managing a portfolio of residential and commercial property.